1)A company had a beginning balance in retained earnings of $43,000. It had net income of $6,000 and paid out cash dividends of $5,625 in the current period. The ending balance in retained earnings account is equal to: A) $108,625 B)$(12,625) C)$11,375 D)$43,375 E)$(11,375) 2)When a company declares of cash dividends retained earnings is reduced. A)True B)False 3)A bond sells at a discount when the: A)Contract rate is above the market rate B)Contract rate is equal to the market rate C)Contract rate is below the market rate D)Bond has a short-term life E)Bond pays interest only once a year 4)When a bond sells at a premium: A)The contract rate is above the market rate B)The contract rate is equal to the market rate C)The contract rate is below the market rate D)It means that the bond is a zero coupon bond E)The bond pays no interest 5)On January 1, 2010, Merrill Company borrowed $170,000 on a 10-year, 7% installment note payable. The terms of the note require Merrill to pay 10 equal payments of $29,238 each December 31 for 10 years. The required general journal entry to record the first payment on the note on December 31, 2010 is: 6)Nike issued 15-year, 9% bonds with a par value of $200,000. Interest is paid semiannually. The market rate on the issue date was 8.5%. Nike received $216,776 in cash proceeds. Which of the following statements is true? A)Nike must pay $200,000 at maturity and no interest payments. B)Nike must pay $200,000 at maturity plus 15 interest payments of $8,000 each. C)Nike must pay $200,000 at maturity plus 30 interest payments of $9,000 each. D)Nike must pay $216,776 at maturity plus 30 interest payments of $9,000 each. E)Nike must pay $216,776 at maturity and no interest payments. 7)A company issued 7%, 4-year bonds with a par value of $200,000. The market rate when the bonds were issued was 7.5%. The company received $190,200 cash for the bonds. Using the effective interest method, the amount of interest expense for the first semiannual interest period is(rounded): A)$1,332,351.00. B)$7,657.50. C)$8,000.00. D)$7,000.00. E)$7,132.50. 8)A company issued 14%, 24-year bonds with a par value of $730,000. The current market rate is 14%. The journal entry to record each semiannual interest payment is: 9)A bond traded at 113